Bad news for middle class

When Jim Flaherty rises to present his 10th budget today, the government bench will rise in cheers and thump their desks in appreciation as our economy is compared to other highly selective economies in the G8.

When Jim Flaherty rises to present his 10th budget today, the government bench will rise in cheers and thump their desks in appreciation as our economy is compared to other highly selective economies in the G8.

But Canadians should really be weighing the price of inaction, because while the Conservatives mark time to an election year, the economy both here and abroad stubbornly refuses to unfold at the government’s electoral pace.

Flaherty will not balance the budget this year, but the reason for that is political, not fiscal.

He can boast of moderate job growth in this country, nothing more, and even that is somewhat illusory.

That growth is fragile, since most of the recent gains were in self-employment, an insecure status by its very nature, and a drop in the unemployment rate is helped along by the number of persons who have given up looking for work.

The labour participation rate is stuck at about 61 per cent but is lower in the youth sector, where unemployment is pushing up against 14 per cent, an enduring problem in this country.

More Canadians are being pushed into part-time jobs and the Canadian Labour Congress says the ranks of the working poor in this country are swelling.

Despite exhortations from Flaherty and former Bank of Canada governor Mark Carney, corporate Canada continues to hoard cash instead of pouring it back into an economy needing a shot of job creation stimulus.

According to a study by the Canadian Centre for Policy Alternatives, corporations in this country merely padded their bottom lines; they are now sitting on a record $572 billion.

The same study also indicates the gap between rich and poor in this country is accelerating, with the top 10 per cent of Canadian households making 21 times the bottom 10 per cent.

The top CEO salaries are 171 times that of the average Canadian worker.

Continued government austerity has thrown into question whether Ottawa can or, more importantly, wants to continue to provide services Canadians expect.

Federal spending will have been cut by $90 billion between 2010 and 2017 at the present pace.

By that point, the Parliamentary Budget Office has estimated, direct government spending will be at its lowest level since 2001, yet the PBO is still being denied the details of 2012 spending cuts by Flaherty to determine the real impact of those on Canadians.

Household debt should be a concern with mortgage rates inevitably set to rise, but that is rarely discussed by this government.

Harper last month called mounting household debt a concern, but nothing to panic about, saying that most Canadians, like his wife Laureen and he, borrowed money because of favourable rates but are prepared for the inevitable rate hikes. Household debt in this country is actually levelling off, he maintained, but Canadians should be vigilant.

In his tour of the Sunday political talk shows, Flaherty said he is prepared to act on the youth unemployment problem, moving on apprenticeships and internships and helping young Canadians “get a start in life.’’

Harper pre-empted Flaherty on Friday with a move that could have a greater impact on youth unemployment than anything his finance minister will table today.

By moving on aboriginal education, with a pledge of almost $2 billion in the years to come, and providing aboriginal sovereignty over education, Harper has at least offered hope that more aboriginals will graduate with widely recognized diplomas and certificates that will make them more attractive to employers upon graduation.

But beyond that, as the government waits for the optimum time to provide any real stimulus to the economy, it will likely spend another year in its comfortable battle mode.

Flaherty has already signalled that charities will come under greater scrutiny, building on a 2012 pledge that targeted environmental groups and the public service will be the popular target of the year as Treasury Board president Tony Clement goes after sick leave and other benefits in what promises to be a highly acrimonious round of bargaining.

One certainty will be that while it preaches austerity, the government will continue to spend our money advertising their economic acumen, including measures in this “stay the course” budget.

While they pounded the belt-tightening drums, the Conservatives spent $473 million in advertising in the five years to the end of 2012.

One thing those ads won’t tell you — budgeting on an election timetable is risky business.

Tim Harper is a syndicated Toronto Star national affairs writer. He can be reached at tharper@thestar.ca.

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